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Greater Phoenix resale market for May is similar to March numbers


June 12, 2007

MESA, Ariz. — Traditionally, May is one of the stronger months for resale housing activity. It appears with 5,220 homes being recorded sold that traditional pattern is continuing. This activity is not far below March (5,385) and is an improvement over April (4,855), but below last years’ 6,870 sales and the 10,425 homes for May 2005. So far in 2007, a total of 24,265 homes have been recorded sold, in contrast to 30,830 for 2006 year to date and 46,485 sales for 2005 year to date.

While the resale market is following a very traditional pattern, the current market lacks the overzealous frenzy to own and/or invest at almost any price and reasoning. The new home has become a strong competitive and attractive alternative to the resale home in many areas of the market as new home builders have been aggressively pursuing buyers through incentives such as specially priced up-grades, free pools and gift cards.

“The general expectation is that the 2007 resale housing market should be a good year, but no where near the records,” said Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness. “This tends to assume that there are no negative geopolitical events and that the subprime problem continues to be contained.”

Much like the ever-increasing sales activity of the last few years, the rapid improvement in prices has disappeared. The median home price in May was $262,000 in comparison to $265,000 for April and last year’s $265,000.

For May 2007, 16 percent of all recorded sales were for homes priced from $125,000 to $199,999, 42 percent for $200,000 to $299,999 and 39 percent for homes priced over $300,000. Last year, 14 percent of all recorded sales were for homes priced from $125,000 to $199,999, 44 percent for $200,000 to $299,999 and 39 percent for homes priced over $300,000. Since the greater Phoenix area is so large, the median price can range significantly from $711,000 ($683,000 in April) in North Scottsdale to $158,500 ($132,000 in April) in the Sky Harbor area of the city of Phoenix.

Because mortgage interest rates declined slightly from last year’s 6.2 percent to 5.9 percent and home prices remained fairly stable, the monthly payment decreased slightly from last year’s $1,380 to $1,320. Even though mortgage interest rates have been declined in the last year, they have been rising for the last few weeks. This has lead to additional concerns about the ability of some homeowners to acquire or maintain their homes.

In response to issues raised in the subprime market, underwriting guidelines have been tightening, making it more difficult for potential buyers to qualify for a mortgage, according to Butler. “Higher underwriting standards and possibly even higher interest rates could make it more difficult and expensive to finance a purchase, causing a more severe limitation on market activity,” he said.

Because townhouse/condominium units are popular with seasonal visitors, it is not unusual to observe an improvement in the early months of the year. Thus, May had 1,245 sales, in comparison to 1,305 for April and 1,470 sales for a year ago. The median home price increased slightly from $184,950 in April to a record $184,990.

The median square footage for a single-family home recorded sold in May 2007 was 1,700 square feet, which is larger then the 1,625 square feet for a year ago. The larger size further demonstrates the role of the move-up sector in the local housing market. In the townhouse/condominium sector, the median square footage was 1,090 square feet, which is smaller than the 1,100 square feet reported a year ago.

  • In contrast to May 2006, recorded sales in the city of Phoenix decreased from 2,120 sales to 1,405 sales, while the median sales price increased to $229,000 from $225,000 for a year ago. Since Phoenix is a geographically large city, the median prices can range significantly such as $158,500 in the Sky Harbor area to $313,495 ($329,500 in April) in the Union Hills area. The townhouse/condominium sector decreased from 465 to 380 sales while the median price increased from $153,700 to $165,745.

  • While the Scottsdale resale home market declined from 535 to 420 recorded sales, the median sales price increased from last year’s $615,000 to $617,000. The median resale home price is $711,000 ($683,000 in April) in North Scottsdale and $320,000 ($333,000 in April) in South Scottsdale. The townhouse/condominium sector in Scottsdale declined slightly from 305 to 295 sales, while the median sales price increased from $261,500 to $273,250.

  • The Mesa resale housing market declined from 790 to 610 sales, while the median price fell from $249,950 to $238,000 ($234,510 in April). The townhouse/condominium sector also fell from 225 to 160 sales, while the median home price decreased from $157,000 to $150,000.

  • Glendale decreased from 575 to 355 sales and the median sales price decreased from $250,000 to $243,000 ($245,000 in April). The townhouse/condominium sector decreased from 80 to 50 sales, while the median sales price decreased from $148,500 to $146,000.

  • For the city of Peoria, the resale market declined from 305 to 245 sales, with the median price dropping from $284,950 to $255,000 ($257,915 in April). The townhouse/condominium sector decreased from 50 to 35 sales and the median price went from $175,000 to $169,500.

  • In comparison to a year ago, the Sun City resale market remained at 120 sales, while the median sales price decreased to $199,000 from $220,000. As resale activity in Sun City West improved from 45 to 70 sales, the median sales price decreased from $259,000 to $258,725. The townhouse/condominium market in Sun City declined from 75 to 55 recorded sales, while the median home price decreased from $149,000 to $130,000. In Sun City West, activity increased from 10 to 25 sales and the median sales price decreased from $172,950 to $152,500.

  • The resale market in Gilbert decreased from 340 to 300 sales and the median sales price decreased from $327,450 to $300,000 ($295,195 in April). The townhouse/condominium market remained at 15 sales as the median sales price increased from $205,000 to $215,000.

  • For the city of Chandler, the resale market fell from 485 to 360 recorded sales, while the median sales price went from $306,000 to 297,750 ($297,950 in April). The townhouse/condominium market decreased from 45 to 40 sales and the median sales price declined from $186,500 to $175,000.

  • The resale market in Tempe decreased from 210 to 155 sales, with the median sales price decreasing from $288,500 to $270,780 ($285,000 in April). The townhouse/condominium sector moved from 100 to 90 sales and the median sales price decreased from $198,000 to $189,400.

  • The highest median sales price was in Paradise Valley at $1,670,000 with a median square foot house of 3,865 square feet.

  • In the West Valley, the following communities represent 10 percent of the resale market.

    • Avondale fell from 145 to 120 sales with the median price moving from $260,000 to $223,000 ($233,975 in April).
    • El Mirage decreased from 95 to 55 sales, while the median home price went from $214,950 to $200,000 ($199,000 in April).
    • Goodyear went from 125 to 90 sales, while the median price decreased from $295,000 to $250,000 ($265,000 in April).
    • Surprise decreased from 275 to 240 sales, with the median price dropping from $256,300 to $245,070 ($246,060 in April).